Sanxin Medical Co., Ltd. announced that 2024H1 achieved operating income of 686.4525 million yuan, an increase of 18% over the same period of the previous year; realized net profit attributable to shareholders of listed companies was 106.2477 million yuan, an increase of 18.74% over the same period last year.
Key points of investment
Collected and landed in many places, and the share of dialysis products expanded
In the first half of 2024, the company's blood purification products achieved revenue of 522.5055 million yuan, an increase of 25.55% over the previous year. Among them, hemodialysis devices, hemodialysis solutions (powder), and hemodialysis pipelines all achieved rapid growth, and export orders for hemodialysis equipment increased. In March 2024, the company participated in the inter-provincial procurement of hemodialysis medical consumables in 23 provinces (districts, military corps), and won the bid for both dialyzers and pipelines. According to the rules for collecting and winning the bid, while the company holds the distribution of the procurement volume, it is also eligible to participate in the distribution of the procurement volume to be distributed. As of the first half of the year, most provinces have implemented it one after another. The company's revenue has maintained rapid growth, and its market share is expected to expand. In June 2024, the company selected the Beijing-Tianjin-Hebei “3+N” Alliance for joint procurement of hemodialysis medical consumables, and the winning provinces continued to expand. In terms of gross margin, the gross margin of the blood purification business in the first half of the year was 33.89%, up 2.03 pp from the same period in 2023.
Dialysis machines benefit from domestic replacement dividends to achieve rapid growth
The subsidiary Weilison is the company's hemodialysis machine production platform. It achieved revenue of 66.403 million yuan in the first half of 2024, an increase of 47.44% over the first half of 2023. According to Frost & Sullivan data, China's hemodialysis machine market is expected to grow from 2.8 billion yuan in 2022 to 6.233 billion yuan in 2026, with a compound annual growth rate of 22.56%, showing a rapid growth trend. In terms of market share, domestic production's share in 2021 is still less than 20%, and there is huge room for import substitution. In addition to hemodialysis equipment, the company actively lays out blood purification treatment fields such as blood filtration and continuous blood purification (CRRT), and has obtained a continuous blood purification pipeline and accessory (CRRT) registration certificate.
The product line has been steadily broadened around key groups
Focusing on extending the internal fistula protection industry chain for patients with advanced nephropathy dialysis patients, the company has obtained registration certificates for products such as PTA hyperbaric balloon dilation catheters, disposable dialysis implants, vascular sheaths, disposable balloon expansion pressure pumps, etc.; for the treatment of diabetes and early to middle stage kidney disease, the company has also successively obtained registration certificates for products such as medical needleless syringes, disposable sterile rectal catheters, and intestinal hydrotherapy machines.
Profit forecasting
It is predicted that the company's revenue for 2024-2026 will be 1.567, 1.85, and 2.177 billion yuan, respectively, and net profit to mother will be 0.239, 0.302, 0.372 billion yuan, EPS 0.46, 0.58, and 0.72 yuan, respectively. The current stock price corresponding to PE is 14.1, 11.1, and 9.0 times, respectively. As the population ages and medical insurance coverage increases, the number of dialysis patients will continue to grow, driving steady growth in the size of the hemodialysis market, and the impact of collection on consumables price reduction is already With implementation, the localization process is accelerated. The company is the leading company in the hemodialysis industry to complete the entire hemodialysis equipment+consumables product chain layout. It has the most registration certificates for hemodialysis products and occupies a leading position in the industry. It will benefit from market expansion and localization processes, cover for the first time, and give it a “buy” investment rating.
Risk warning
Risks such as the risk that the price of collection falls short of expectations, that the price of products may drop drastically, that domestic substitution falls short of expectations, and that R&D falls short of expectations.